Crude plunges 6.79% as Middle East tensions ease, but supply risks persist

Rich Asplund Mon, July 27, 2026 at 8:37 AM PDT 4 min read

• RB=F +1.67%

September WTI crude oil (CLU26) is down -6.06 (-6.79%) today, and September RBOB gasoline (RBU26) is down -0.0679 (-2.10%).

Crude oil and gasoline prices are sinking, with gasoline falling to a 1-week low. The easing of tensions in the Middle East is weighing on energy prices after the US and Iran held off on further attacks against each other for a third day. Iran signaled it would refrain from any retaliation as it held negotiations with Oman over the Strait of Hormuz. President Trump also said today that the US paused Iran strikes to give peace talks a chance.

However, tensions remain high in the Middle East as the US maintains its blockade of Iranian oil shipments in the Persian Gulf. Houthi militants in Yemen claimed to have struck facilities linked to Saudi Aramco in the Red Sea port towns of Jizan and Yanbu on Saturday. Yanbu, the western end of the East-West pipeline, has become Saudi Arabia's key crude export outlet since the Strait of Hormuz has been effectively shut off by the war. Jizan is home to a refinery and export terminal along the Red Sea.

Global crude oil supplies are tightening due to reduced flows through the Strait of Hormuz. The International Maritime Organization recently warned that it is too dangerous to cross the Strait of Hormuz at the moment, and visible transit through the strait has fallen sharply as Iran continues targeting tankers attempting to transit it.

Crude prices also have support as Ukraine intensifies drone attacks on Russian oil infrastructure:

• Russian crude production fell to 8.928 million bpd in June, the lowest in 2.5 years, according to monthly OPEC data.
• According to EA Analytics, Russian crude-processing rates will average 3.51 million bpd in July, the lowest in 24 years, amid damage to Russian energy infrastructure caused by drone and missile attacks from Ukraine.
• According to Bloomberg, Ukrainian forces have attacked Russian fuel-producing facilities more than 50 times this year, hitting at least 24 of Russia's 34 largest refineries.
• As of the end of June, around 90% of Russian regions have imposed some form of fuel rationing or reported supply issues, as refining capacity has plunged following damage to facilities.
• The strikes have deepened a nationwide gasoline shortage, with several major refineries shut down and the government banning almost all gasoline, jet fuel and diesel exports.
• Russia is the world's number two diesel exporter, after the US, according to Vortexa.

Stronger Russian crude exports are also adding to global oil supplies, which is bearish for prices. Data compiled by Bloomberg show the four-week average of Russian crude exports rose to 4.13 million bpd through June 28, the highest since Russia invaded Ukraine in 2022. Russia may be boosting its crude exports as the country's refining capacity has plunged due to damage at its refining facilities from Ukraine drone and missile attacks.

As a bearish factor for crude, OPEC delegates said on May 14 that the cartel aims to continue a series of oil quota increases over the next few months, completing the return of halted oil production by the end of September. The group already formally agreed to restore about two-thirds of the 1.65 million bpd supply cutback it made back in 2023 and said it plans to raise output targets further and to revive the final portion in three more monthly stages. On July 5, OPEC+ said it will boost its crude output by 188,000 bpd in August, though that increase might prove difficult amid renewed US-Iran military attacks in the region. OPEC's June crude production rose by +2.34 million bpd to 18.75 million bpd.

Vortexa reported today that crude oil stored on tankers that have been stationary for at least 7 days rose +3.5% w/w to 102.84 million bbl in the week ended July 24.

Last Wednesday's EIA report showed that:

• US crude oil inventories as of July 17 were -5.3% below the seasonal 5-year average
• Gasoline inventories were -7.1% below the seasonal 5-year average